Criminal liability of company

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  • © Altacit Global 2009 Email: info@altacit.com
  • Criminal liability of company

    1. 1. CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 BANGALORE Suite 920, Level 9, Raheja Towers, 26-27, M G Road, CRIMINAL LIABILITY OF A COMPANY / CORPORATIONS Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 COIMBATORE BB1, Park Avenue, # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 Lakshminarayanan Alaguraja Advocate Altacit Global EMAIL info@altacit.com WEBSITE www.altacit.com
    2. 2. Corporate Liability CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, In criminal law, corporate liability determines the extent to which a Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 BANGALORE Suite 920, Level 9, corporation as a legal person can be liable for the acts and omissions of the natural Raheja Towers, 26-27, M G Road, Bangalore - 560 001. persons it employs. It is sometimes regarded Tel: +91 - 80 - 6546 2400 COIMBATORE as an aspect of criminal vicarious liability, as BB1, Park Avenue, # 48, Race Course Road, Coimbatore - 641018. distinct from the situation in which the Tel: +91 - 422 – 6552921 wording of a statutory offence specifically attaches liability to the company / corporation. EMAIL info@altacit.com WEBSITE www.altacit.com
    3. 3. Formation of a Company CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 • Company = organization of persons and BANGALORE Suite 920, Level 9, funds for common purpose. Raheja Towers, 26-27, M G Road, Bangalore - 560 001. • Only an Incorporation makes it a legal Tel: +91 - 80 - 6546 2400 COIMBATORE entity – registration under Companies BB1, Park Avenue, # 48, Race Course Road, Act, 1956 – conclusive proof of valid formation. Coimbatore - 641018. Tel: +91 - 422 – 6552921 • Memorandum and Articles of Association – also shareholder’s agreement. EMAIL info@altacit.com WEBSITE www.altacit.com
    4. 4. Promoter of a Company CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, Mylapore, Chennai - 600 004. • Promoter = one who promotes the Tel: +91 - 44 - 2498 4821 BANGALORE formation of the company – Suite 920, Level 9, Raheja Towers, 26-27, M G Road, entrepreneur. • Personally liable for contracts before Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 COIMBATORE BB1, Park Avenue, # 48, Race Course Road, Coimbatore - 641018. completion of the incorporation Tel: +91 - 422 – 6552921 process. • Fiduciary relationship – and legitimate expenses are payable – EMAIL “sweat equity”, etc. info@altacit.com WEBSITE www.altacit.com
    5. 5. Objects Clause CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, • MoA – Main, Ancillary and Other Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 Objects. BANGALORE Suite 920, Level 9, Raheja Towers, • Investor protection and as caution 26-27, M G Road, Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 to outsiders – Doctrine of Ultra COIMBATORE BB1, Park Avenue, Vires – exceeding the legal power. # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 • Ultra vires actions are not binding on the Company. EMAIL info@altacit.com WEBSITE www.altacit.com
    6. 6. Articles of Association CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, Mylapore, • For internal management – rules for day- to-day activities. Chennai - 600 004. Tel: +91 - 44 - 2498 4821 BANGALORE Suite 920, Level 9, • Rule of Constructive notice = presumed knowledge of the AoA by anybody dealing Raheja Towers, 26-27, M G Road, Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 COIMBATORE with the Company. BB1, Park Avenue, # 48, Race Course Road, • Rule of “indoor management” – an exception – of procedural compliance – to Coimbatore - 641018. Tel: +91 - 422 – 6552921 protect external interests with reasonable efforts. EMAIL info@altacit.com WEBSITE www.altacit.com
    7. 7. Criminal Liability … CHENNAI3rd Floor, ‘Creative Enclave’, 1. Nature and seriousness of crime.148-150, Luz Church Road, Mylapore, Chennai - 600 004. 2. Complicity and pervasiveness within the Company Tel: +91 - 44 - 2498 4821 BANGALORE 3. History of similar conduct. Suite 920, Level 9, Raheja Towers, 26-27, M G Road, Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 4. Corporation’s timely, voluntary disclosure COIMBATORE BB1, Park Avenue, # 48, Race Course Road, and cooperative efforts. 5. Presence of a compliance and ethics code. Coimbatore - 641018. Tel: +91 - 422 – 6552921 6. Prosecution = combined efforts of the Corporation and the Investigating Authorities Concern of “confidential EMAIL information”. info@altacit.com WEBSITE www.altacit.com
    8. 8. Criminal Liability … CHENNAI3rd Floor, ‘Creative Enclave’, 1. Rationale for Criminal liability = enormous influence on economy.148-150, Luz Church Road, Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 BANGALORE 2. Strict degree of Vicarious criminal liability attribution of “collective mens rea” of Suite 920, Level 9, Raheja Towers, 26-27, M G Road, Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 Executives. COIMBATORE BB1, Park Avenue, # 48, Race Course Road, 3. Gross negligence or breach of duty. 4. Test of “Organizational approach”. Coimbatore - 641018. Tel: +91 - 422 – 6552921 5. Applies to Partnerships/Trusts/Unions too. 6. Statutory compliances also covered for EMAIL info@altacit.com liability. WEBSITE www.altacit.com
    9. 9. Criminal Liability … CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, • Fundamental Rights of a Company Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 – Fair trial = Procedural safeguards BANGALORE Suite 920, Level 9, Raheja Towers, 26-27, M G Road, – Issue of Political funding Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 COIMBATORE • Punishments for Company: BB1, Park Avenue, # 48, Race Course Road, Coimbatore - 641018. – Restitution; Fines; Probation under Tel: +91 - 422 – 6552921 Court supervision; Forfeiture clauses; and Public apologies EMAIL info@altacit.com WEBSITE www.altacit.com
    10. 10. Culpability of Company CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, • Crime committed by an employee Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 despite strong Corporate policy BANGALORE Suite 920, Level 9, against it? Raheja Towers, 26-27, M G Road, Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 • Crimes committed by contractors/ COIMBATORE BB1, Park Avenue, consultants? # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 • Crimes committed in ignorance or wrong understanding of law? • Serious frauds committed by senior management? EMAIL info@altacit.com WEBSITE www.altacit.com
    11. 11. Offences under Companies Act CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, Mylapore, Chennai - 600 004. Section Offences Tel: +91 - 44 - 2498 4821 (Companies Act 1965) BANGALORE Suite 920, Level 9, Section 169 Failure to table accounts. Raheja Towers, 26-27, M G Road, Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 Section 364(2) Making false and misleading statement. COIMBATORE BB1, Park Avenue, Section 131 Disclosure of interest in contracts, property, # 48, Race Course Road, officers etc Coimbatore - 641018. Tel: +91 - 422 – 6552921 Section 132 Breach of duty and liability of officers. Section 132E Substantial property transactions involving directors. EMAIL info@altacit.com WEBSITE www.altacit.com
    12. 12. Offences under Companies Act CHENNAI3rd Floor, ‘Creative Enclave’, Section Offences148-150, Luz Church Road, Mylapore, (Companies Act 1965) Chennai - 600 004. Tel: +91 - 44 - 2498 4821 Section 167 Failure to keep accounts for 7 years. BANGALORE Suite 920, Level 9, Raheja Towers, 26-27, M G Road, Section 125 Undischarged bankrupt acting as Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 director. COIMBATORE BB1, Park Avenue, Section 133A Prohibition of loan to persons # 48, Race Course Road, Coimbatore - 641018. connected with directors Tel: +91 - 422 – 6552921 Section 135 General duty to make disclosure Section 174 Powers and duty of auditors as to reports on accounts Section 367 Use of a company name in business EMAIL prior to incorporation. info@altacit.com WEBSITE www.altacit.com
    13. 13. CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 BANGALORE Suite 920, Level 9, Raheja Towers, CASE STUDY 26-27, M G Road, Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 COIMBATORE BB1, Park Avenue, # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 EMAIL info@altacit.com WEBSITE www.altacit.com
    14. 14. Iridium India Telecom Ltd. vs. Motorola Inc. 2011(1) SCC 74 CHENNAI3rd Floor, ‘Creative Enclave’, The Hon’ble Supreme Court allowed the prosecution against148-150, Luz Church Road, Mylapore, the Motorola setting aside the defence plea that it could not Chennai - 600 004. Tel: +91 - 44 - 2498 4821 have the necessary mens rea. A Company/Corporation is BANGALORE virtually in the same position as any individual and may be Suite 920, Level 9, Raheja Towers, 26-27, M G Road, convicted of offences including those requiring mens rea. It Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 cannot escape liability for a criminal offence merely because COIMBATORE the punishment prescribed is that of imprisonment. The BB1, Park Avenue, # 48, Race Course Road, criminal intent of the alter ego of the company i.e. the persons Coimbatore - 641018. Tel: +91 - 422 – 6552921 or group of persons that guide the business of the Company, would be imputed to the corporation, depending upon degree of control exercised by persons in charge of affairs of company. Held if degree of control is so intense that a corporation may be said to think and act through a person or body of persons, mens rea of person or persons in control is attributable to the EMAIL info@altacit.com corporation. WEBSITE www.altacit.com
    15. 15. CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 BANGALORE Suite 920, Level 9, Raheja Towers, Thank You 26-27, M G Road, Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 COIMBATORE BB1, Park Avenue, # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 EMAIL info@altacit.com WEBSITE www.altacit.com

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